Mortgage Early Redemption Fee

wasrooney

Hi, I am new to the forum but wanted to get some advice about early redemption fees. Due to the situation with COVID we are moving house and are currently locked into a 10 year fixed mortgage deal with Barclays. We need to increase the term but in order to do this Barclays say we will have to pay an early redemption fee of 5k. Are banks giving any concession in light of the current financial situation, or will I have to 'bite the bullet' and pay this? Many thanks in advance for your responses / advice. Obviously 5K is a massive blow to our finances.

John_

Are you certain that they can’t offer you another product that would let you avoid the fees? Often, if your borrowing is the same amount or higher there’s a way to achieve this.
If not, then no, there’s normally no way to avoid it.

wasrooney

John_ , They said even if I take another product with them I would have to pay the redemption fee. I will maybe raise this with them again. Thank you for your help.

dunstonh

Are banks giving any concession in light of the current financial situation, or will I have to 'bite the bullet' and pay this?

This is to cover a cost that the banks suffer.  So, there is  no logical reason for them to waive the fee and there is no information out there that suggests any banks are waiving the ERC in this case.

wasrooney

Thanks for this information, you are probably right. Barclays made a net profit of £695 million in the first half of 2020, but I can understand that in order to make these kinds of profits, it is important to stick to contractual obligations. 

dunstonh

wasrooney said:

Thanks for this information, you are probably right. Barclays made a net profit of £695 million in the first half of 2020, but I can understand that in order to make these kinds of profits, it is important to stick to contractual obligations. 

How much profit they make is totally irrelevant.  They are a multi-national company and you expect large profits.  They will also have years when they lose that amount as well.